Elon Musk once called Tesla Inc.’s $2.6 billion acquisition of debt-burdened SolarCity Corp. “blindingly obvious.” Three years later, it’s anything but.
The shareholders claim in the 3-year-old lawsuit that SolarCity was basically insolvent when the companies publicly announced plans to merge in June 2016 and not worth the price ultimately negotiated by Tesla’s “conflicted fiduciaries.” They say they’ll prove that at trial. Meanwhile, they asked the judge to rule that Tesla has the burden to show the deal was fair and can’t rely on the argument that stockholders approved the transaction.
More than 85% of the company’s stockholders voted to back the acquisition of SolarCity, but pension funds that opposed the buyout accuse Musk of wrongly inflating SolarCity’s value.Tesla’s board first heard about Musk’s proposal to buy SolarCity at an emergency board meeting in late February 2016. At the time, Musk was SolarCity’s chairman and largest shareholder, his cousin Lyndon Rive was SolarCity’s CEO, and the boards of the two companies were far from independent.
Raising equity or taking on additional debt wasn’t an option for SolarCity, which installed solar panels on homes and businesses.
Please read the designs I emailed you and G Shotwell at SoaceX